Hotel pipeline poses challenges for UAE (page 2 of 2)

However, he believes that the situation in the UAE capital is manageable. 'Certainly for Abu Dhabi we do not see a disaster scenario by any means,' he said. 'There may be some corrections, but we don't see it going downwards. If anything it might flatten a bit.'

Dubai might be in a better position to cope with new hotel supply, Jonklaas argues, because hotels in the emirate had their 'annus horribilis' in 2009, having to deal with the impact of the global financial crisis on tourism as well as the addition of approximately 10,000 new rooms. 'This means that while another 10,000 rooms may be added to Dubai's hotel stock in the next one-to-two years, existing hotels are better prepared to deal with the additional supply,' he said.

So far, hotels in Dubai have managed to keep occupancy figures relatively high, but at the expense of room rates. 'The positive news for Dubai is that new supply has been absorbed into the market and occupancy has climbed,' says Jeff Strachan, VP Sales and Marketing, Middle East and Africa, Marriott Hotels International Limited.

'Much of that new supply has come in the three and four star segments, which will, by definition, pull the citywide ADR (average daily rate) downwards,' he noted. 'There are many proactive and creative plans and actions in place across the city to continue to drive occupancies and we are supportive of all of these initiatives.'